One week into the war, and Israel's entire tech sector, "the engine of the economy", seems to have mobilized to fight Hamas, whether as reservists, or though volunteer ventures. Many entrepreneurs, who in normal times would be managing large development projects or raising funds for the company's survival or growth, have now found themselves diverting company resources - employees, money, and the attention of their investors - to efforts to benefit the survivors of the massacres in the south and to logistical assistance to soldiers.
Overwolf CEO Uri Marchand, cofounder of the video games software platform developer, which has 170 employees, has been busy assisting soldiers and residents in the south since last Sunday. "In the Second Lebanon War, I was a Yasour transport helicopter pilot, but today I am no longer called to the reserves," he says. "So I try to be where I can."
Last week he began by finding protective equipment for soldiers, such as ceramic body armor and helmets, but when he realized that he would not be able to organize a shipment from the UK in time, he switched to peripheral equipment such as knee pads, headlamps, mattresses and thermal insulation. "We worked on it for two days, and then we realized that the situation in the units was not so bad, so we pivoted to locating housing for evacuees from the settlements," he says. He spends quite a few hours a day talking to real estate developers to find empty apartments where residents from Kfar Aza, Sderot and Ofakim can live. Today he is helping furnish an apartment in Ra'anana for evacuees.
Overwolf’s war effort is not just a slogan. Of the company’s 130 employees in Israel, fifteen, more than 10%, have been drafted into the IDF reserves, and about 35 of those remaining - including the entire human resources staff and about a third of the marketing staff - are engaged full-time on aid work. Marchand is paying a business price for his efforts, deferring anything not urgent to a later time. "We have the launch of a game in collaboration with Sony PlayStation that is due to take place in a week and a half - that’s not something that we can postpone - but there’s a clear instruction to our managers: anything that doesn’t have to be done this quarter can be put off until the next quarter. It’s at their discretion what to postpone." Recruitment at the company has come to a halt: the recruitment team is entirely occupied with voluntary tasks. Product enhancement, code maintenance, and making cloud computing use more efficient, and development process, have all been shunted aside.
Ronen Nir, managing director in the Israel office of US venture capital firm PSG Equity, estimates that between 10% and 15% of Israel’s tech workers have been drafted into the IDF reserves. That means that about 60,000 of the 400,000 people employed in Israeli high-tech companies and development centers of international companies are on active service. It is estimated that the proportion of employees in cybersecurity companies now in the reserves is even higher.
"Among the remaining employees, morale is low, or they just don’t have a head for work, but the situation is far from collapse or panic," he says. With the addition of life-partners and children of high-tech workers who have received orders to report for military duty, that’s another 10%, which is a big chunk, and it leaves those who are left to cover for their colleagues.
High-tech companies have set up dozens of aid and donation initiatives in the past week. The Brothers and Sisters in Arms (Achim Leneshek) organization of IDF reservists that arose as part of the protest movement against the government’s judicial overhaul program has become a civilian war room, organizing the supply of protective equipment to soldiers and aid packages to residents of southern communities who have been evacuated. Companies in the Israel Growth Forum, among them Fiverr, Wix, and Monday.com, have set up a series of technological initiatives to help survivors of the Hamas massacre in the settlements bordering the Gaza Strip and the families of those taken hostage. Among these is an app called "On Our Way" ("Kvar Ba’im"), which enables users to call for rescue from a range of forces, as a lesson from the events of October 7; a center that coordinates government aid programs and assists them in implementing technology, such as the use of Monday.com’s project management software; and a civilian war room with 15,000 volunteers serving the families of hostages.
Fiverr CEO Micha Kaufman says that the network that Fiverr set up to assist company employees based in Ukraine to continue working during the war from there and from neighboring Poland has been activated in Israel as well. "We created the infrastructure and the division of tasks in the same way," he says. Ironically, he adds, it’s the Ukrainian workers who are backing up some of the Israelis who have been drafted for reserve duty or who are working on aid projects. Meirav Bahat, co-founder and CEO of cyber company Dazz, says that employees in the US are backing up development and sales people into the late hours of the night.
A weak starting position
Adam Fisher, a partner in the Tel Aviv office of US venture capital firm Bessemer Venture Partners, is acting together with Liad Agmon of Insight Partners, Gigi Levy of NFX, and Ziv Kop of OG Venture Partners, to raise millions of dollars from venture capital and technology investors for initiatives set up by entrepreneurs from WalkMe and employees at HP. He says that it’s easier for the large companies to cope with employees being called up for reserve duty and allocating resources for aid. "They already have a support network for overseas customers, and their sales people are overseas in any case," he says. "Even if development is delayed by a few weeks, it’s not a terrible blow as far as they are concerned. But for a small company of fifteen people where the CEO and three engineers have been drafted, the blow can be very hard indeed."
For all that, he does not fear an investment crisis, but rather a situation in which thing get progressively worse for Israel over a long period. Adv. Yair Geva who heads the Startups and Emerging Companies Group at law firm Herzog Fox & Neeman, says, "Besides the commitment of many US funds to help Israelis, we are seeing substantial investment coming from the UAE. There’s no cooling down there, but rather the opposite - for them, it’s a strategic decision. On the other hand, on the Israeli side, there’s naturally less attention being paid to raising capital, with Israeli entrepreneurs and investors preoccupied by events."
"Israel’s technology industry went into this war from a point of great weakness," says Marchand. "I have friends who intended to raise a venture capital fund, and in the weeks before the war it turned out that the investors who had promised to put money in had changed their minds. We’ll feel the impact of what we have been through in the past year for another ten years. I hope that the solidarity that has come about in the war period will enable us to recover more quickly afterwards."
Kaufman says that the collaborations and the civilian infrastructure formed since the war broke out, enabling several high-tech companies to cooperate to build a technological war room within hours to locate missing persons, to carry out search and rescue, and to offer logistical and psychological aid, will also help the industry to take part in government projects later on. "The high-tech industry is strong, and has a spirit of volunteering, and for all the smears directed against it because of its role in the protest movement, today all the civilian war rooms are manned by those same people, extending a helping hand to everyone without question. If only the state would do this. We don’t want to replace it, but to develop for it, in record time, systems that it would have taken it far longer to set up, and to transfer them to it."
Published by Globes, Israel business news - en.globes.co.il - on October 15, 2023.
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